A back-flip on the carbon tax. John Menadue

A number of my friends were impressed with the recent public debate between Bill Shorten and Anthony Albanese. They told me that they had expressed an interest online to join or rejoin the ALP after many years absence. Without exception they now say that they will not pursue their membership enquiry until the parliamentary wing of the Labor Party decides to stick with the carbon tax. In short, they were all asking the same old question ‘what does Labor stand for?’

At the last election the ALP promised that it would move quickly from the carbon tax to an emissions trading scheme. That was understandable and commendable. But if Labor cooperates in the repeal of the carbon tax, all that will remain in the public domain on climate change is Direct Action. This so-called carbon pollution policy is flimsy. It is really a pretext for a policy.

The ALP should cling to the policy it presented at the last election, end the carbon tax but only if it is replaced by an Emissions Trading Scheme (ETS).

It was not that the policy on the carbon tax was wrong. All the problems surrounding the carbon tax for the previous government were political – a broken promise, gross political exaggeration by Tony Abbott and a compliant Murdoch media.

In my blog of 24 October “The Carbon Tax- policy and politics” I pointed out that the carbon tax is working to reduce carbon pollution and clearly the wild exaggerations of Tony Abbott have not come to pass. As Peter Martin in the SMH has put it, the carbon tax has become part of the furniture. We should leave it alone unless there is something better. And certainly Direct Action is not something better; it is far worse.

At the same time we are hearing about the possibility of the ALP doing a back-flip on the carbon tax, the Fairfax media has surveyed 35 of Australia’s most eminent economists on the subject. Thirty out of the 35 favoured the carbon tax evolving into an ETS.

BT Financial’s Chris Caton said that any economist who did not opt for an ETS should hand his degree back. The renowned Australian economist Justin Wolfers said that ‘Direct Action” would involve more economic disruption but have a lesser environmental payoff than a trading scheme under which big emitters have to pay for their emissions.’ Professor John Freebairn of the Melbourne University said ‘Placing a price on greenhouse gas emissions pollution, either by a tax or by an emissions trading scheme, is the least cost way to reduce pollution.’ Rob Henderson, the senior economist at NAB, said ‘If I had to make a choice between pricing carbon and having bureaucrats allocating permits, then I’m going to go for the market mechanism every time.’

Until the business sector went politically partisan in the lead-up to the last election, numerous business leaders supported a carbon tax and/or an ETS. Marius Kloppers then the CEO of BHP Billiton, called for a ‘mosaic of initiatives’ to tackle global warming, including a combination of a carbon tax and a limited ETS. He was backed by the then Business Council of Australia President, Graham Bradley.

In its 2011 submission to the Clean Energy Future legislation, Westpac said that it welcomed legislation ‘to introduce a price on carbon within a market framework’. AGL supported the introduction of a ‘least-cost market mechanism’. Grant King of Origin Energy was asked ‘are you in favour of having a carbon price or not?’ King responded ‘Well, the short answer to that question is yes’.

At the same time that the ALP is thinking of doing a back-flip on the carbon tax, Tony Abbott made another sophisticated and intellectual contribution to the climate-change debate. He told the readers of the Washington Post that the carbon tax is ‘socialism masquerading as environmentalism’. But some of his conservative heroes are strong supporters of market means to reduce carbon pollution. Angela Merkel, probably the most prominent conservative leader in the world, believes that polluters should pay for the damage they create. She favours putting a price or tax on greenhouse gas pollution. Another favourite of Tony Abbott’s, the British Prime Minister, David Cameron, has told us ‘The market is an effective way to [get control of global emissions]’.

Those other key international institutions, the World Bank, the IMF and the OECD, have all endorsed putting a price on pollution.

Where does Tony Abbott get his learning on climate change? Greg Hunt gets it from Wikipedia. Tony Abbott seems to get it from Lord Monkton and Cardinal George Pell. He must also rely heavily on his Kirribilli think tank-Miranda Devine, Piers Akerman, Gerard Henderson, Paul Kelly, Denis Shanahan, Janet Albrechtson and Andrew Bolt.

Out of all this, let’s hope that the ALP doesn’t do another back-flip on the reduction of carbon pollution. It should hold to the carbon tax until a better option can be put in place – an ETS. If the carbon tax is repealed and we only have Direct Action in the field, we would not have a credible national policy to reduce carbon pollution.